Woman Claims Bipolar Disorder Caused by Job

Ruling: The workers’ compensation magistrate held that a cook failed to establish a mental disability arising out of incidents of alleged harassment in the workplace.

What it means: In Michigan, where the worker fails to establish that her bipolar disorder was caused, contributed to, aggravated, or accelerated by workplace stressors in a significant manner, and she has not established a new or different diagnosis to explain her alleged ongoing emotional difficulties, she is not entitled to workers’ compensation benefits for her alleged mental injury.

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Summary: The workers’ compensation magistrate denied benefits to a cook, who alleged she sustained a compensable mental disability due to harassment in the workplace. Based on the evidence, the magistrate found the cook failed to establish a causal connection between actual work events and a psychological injury and disability. The cook did not satisfy her burden of proof to show actual employment events which led to disability. Although she may have experienced some uncomfortable situations at work toward the end of her tenure with the employer, she was engaging in many incidents of odd behavior during this time period on her own accord that were caused or prompted by her underlying bipolar condition. The magistrate could not conclude that any of the offending incidents the cook complained about were significant contributing factors to an aggravation of her underlying mental illness.

Therefore, the cook did not establish a personal injury.

Worker Rebuts Claim That Injury Was Weed-Related

Prock v. Bull Shoals Boat Landing, No. CV-12-73 (Ark. 02/27/14)

Ruling: The Arkansas Supreme Court held that a worker was entitled to benefits because he rebutted the presumption that his accident was substantially occasioned by the use of illegal drugs.

What it means: In Arkansas, a workplace injury that is substantially occasioned by the use of illegal drugs is not compensable. Once evidence is admitted that drugs were in the worker’s system at the time of the accident, he must show that the accident was not substantially occasioned by intoxication.

Summary: A worker for Bull Shoals Boat Landing was instructed by his supervisor to cut the tops off two barrels. He and a coworker used an acetylene torch to cut the barrels. When cutting the second barrel, there was an explosion, and the worker was injured. Following the accident, a drug test came back positive for cannabinoids. The worker admitted that he frequently smoked marijuana but claimed that he quit two weeks before the accident so that he could pass a drug test at a new job. He sought compensation. The Arkansas Supreme Court held that he was entitled to benefits.

The court found that the worker rebutted the presumption that his accident was substantially occasioned by his drug use. The court found that no one saw the worker intoxicated on the day of the accident, no one saw him ingest anything, and no one had seen him impaired at work on prior occasions. Also, the court found he performed a task that he had been asked to do in the same manner in which he had habitually performed it in the past. The court found that the Workers’ Compensation Commission “arbitrarily disregarded” testimony that supported the worker’s claim. The court found it was speculation that the worker was actually high on the day of the accident and that he had been shown an alternative method for opening barrels.

A dissenting judge opined that the majority erroneously reviewed the evidence in the light most favorable to the worker. Another dissenting judge noted that the commission did not believe the worker’s testimony and opined that out of displeasure with a perceived unfairness with the commission’s decision, the majority sacrificed the court’s standards of review.

Nurse Firing Wasn’t Related to TTD Claim

Ruling: The Ohio Supreme Court held that a nurse was not entitled to temporary total disability benefits because she voluntarily abandoned her employment.

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What it means: In Ohio, a worker who voluntarily abandons her employment for reasons not related to the work injury cannot receive TTD compensation.

Summary: A licensed practical nurse was injured at work. Her workers’ compensation claim was allowed for her back injury, and she was moved to light-duty work. A state surveyor reported that the nurse failed to communicate a resident’s dietary order change and failed to check a resident’s feeding tube.

After the nurse refused her supervisor’s request for a meeting, the employer sent the nurse a letter informing her that she had been terminated. In the meantime, a nurse practitioner certified that the nurse was medically capable of continuing light-duty work. After the nurse talked to her supervisor, a physician certified that she was temporarily and totally disabled from all employment beginning on the date of her injury. The nurse sought TTD benefits. The Ohio Supreme Court held that she was not entitled to TTD benefits.

The court explained that a worker who voluntarily abandons her employment for reasons not related to the work injury cannot receive TTD compensation. When a worker’s termination arises from her decision to engage in conduct that she knows will result from termination, it can be considered a voluntary abandonment. Although the nurse argued that the employer did not identify a written work rule that defined the prohibited conduct for which she was terminated, the court pointed out that she was provided with a copy of the company handbook that listed her duties so she was on notice that her actions could result in termination.

The court rejected the nurse’s argument that the timing of her termination demonstrated that it was a pretext to avoid paying her benefits. The court pointed out that the decision to terminate her was made before the physician certified that she was TTD.

A dissenting judge opined that the majority’s decision was contrary to the no-fault system of workers’ compensation and left the nurse’s injury uncompensated despite the fact that her claim was allowed.

Benefits Approved for Horseplay Injury

Ruling: The New Mexico Court of Appeals held that a worker’s injury due to her coworker’s horseplay was compensable.

What it means: In New Mexico, if a worker was a nonparticipant in a coworker’s horseplay that led to her injury, her injury arises out of and in the course of employment and is compensable.

Summary: A housekeeper for Miners’ Colfax Medical Center suffered an injury while she was on a break at her workplace. A coworker grabbed her by the shoulders in the area of her neck and lifted her off the ground. Although the coworker was reportedly joking around, the worker sustained “significant” spinal stenosis and cervical compression that required surgery. The New Mexico Court of Appeals held that the housekeeper’s injury was compensable.

Substantial evidence showed that the housekeeper did not participate in the coworker’s horseplay. Although there were different accounts as to whether the housekeeper physically participated in the exchange before the coworker laid his hands on her, another coworker said that the housekeeper was joking and laughing but did not engage in physical contact. The court found that the housekeeper’s injury was the result of an incident she neither expected nor designed, so it was compensable.

The court also found that the housekeeper was entitled to a 26 percent whole body impairment rating. An independent medical examiner assigned her with a whole person impairment rating of 26 percent. The examiner’s conclusions were grounded in reasonable medical certainty. The examiner concluded that the housekeeper’s gait pattern was consistent with cervical myelopathy. Although the housekeeper’s prior records did not record gait abnormalities, the examiner thought it was likely that the housekeeper had abnormalities that were not identified.

The court found that the medical center could offset its disability benefit only to the proportion that corresponded to its premium contribution.

Injured Worker Seeks Indemnity Payments for All Three Jobs

Ruling: The Arizona Court of Appeals held that a worker’s income from a horse care business should not be included in the calculation of her average monthly wage.

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What it means: In Arizona, a worker’s concurrent employment as an independent contractor is not included in the calculation of her AMW.

Summary: A worker for Sonic Restaurants injured her shoulder. Hartford, Sonic’s insurer, accepted her claim and based her compensation on her average monthly wage from Sonic. Later, the parties agreed that the worker’s benefits should be increased to include her wages from her concurrent job at a home improvement store. The worker claimed that her AMW calculation should also include earnings from a horse training and rehabilitation business she established just before her injury. She claimed that she received five contracts to train and rehabilitate horses but had not received payment other than a $100 deposit from one horse owner. The Arizona Court of Appeals held that her income from the horse care business should not be included in the calculation of her AMW.

The court concluded that the worker’s income from the horse business arose from an independent contractor relationship with the horse owners, so it should not be included in the AMW calculation. The contracts referred to the worker as a “contractor.” Nothing in the contracts indicated that the horse owners had a right to control the manner in which the worker trained or cared for the horses. The worker did not show that the horse owners had any control over her schedule or furnished any equipment for her use. The evidence did not establish that she was an employee of the horse owners and subject to the workers’ compensation law.

The court rejected the worker’s argument that she was a sole proprietor rather than an independent contractor. A sole proprietor may be entitled to benefits, but the determination was at the discretion of the insurance carrier with whom the sole proprietor applied for workers’ compensation coverage. Here, the worker did not demonstrate that she obtained workers’ compensation coverage for her horse business or that she would have received benefits as a sole proprietor had she been injured while working in her horse business.

Diabetic Ignores Doctor’s Orders, Claims Benefits for Lost Toe

Ruling: In an unpublished decision, the Nebraska Court of Appeals held that an operator’s failure to comply with medical treatment warranted a reduction in benefits.

What it means: In Nebraska, a worker’s failure to comply with medical treatment, resulting in the worsening of his condition, may result in a reduction of benefits.

Summary: A machine operator for Magnus Co. developed a blister on his right big toe. The operator had preexisting diabetes. He went to his family doctor, but the sore did not heal. The operator admitted that he did not take all the medication prescribed to him by the doctor. Later, the operator was running a fever, but he did not go to the hospital as recommended by the doctor. The doctor referred him to a physician at a wound care clinic. The physician recommended that he use crutches, but he did not do so. Eventually, the operator’s toe was amputated. The operator sought benefits. The Nebraska Court of Appeals held that his failure to comply with medical treatment warranted a reduction in benefits.

Evidence established the impact of the operator’s noncompliance with medical treatment. The physician opined that the operator’s noncompliance with her recommendation to use crutches and stay off the foot was a “very big factor” in the nonhealing of his wound. An expert in diabetes treatment agreed with the physician that the operator’s noncompliance was a significant factor in his ultimate medical condition.

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The court explained that an employer is not liable for extra benefits when a worker’s conduct makes his condition worse. The court found that the operator unreasonably hindered his medical treatment and Magnus was liable only for the operator’s initial treatment with his family doctor.

The operator argued that he should be awarded attorney’s fees related to his initial treatment and Magnus’ failure to timely pay the bill. The court rejected the argument, finding it was raised for the first time on appeal.

Christina Lumbreras is a Legal Editor for Workers' Compensation Report, a publication of our parent company, LRP Publications. She can be reached at [email protected]

Rates are likely to rise for many lines of insurance in 2019, and management liability is no different. In the year ahead, the management liability market will be “stable, but firming,” said Keith Riccio, Vice President, Management Liability and Specialty, Nationwide.

On average, companies can expect to see 10 to 20 percent increases in D&O pricing at renewal, which Riccio said is “significant, but warranted” given prolonged soft market conditions amid growing loss frequency and severity.

“If you compare the D&O market five years ago to today, it’s safe to say anywhere from 20 to 30 percent of premium has been taken out of the market,” Riccio said. D&O losses are reaching record levels thanks largely to the growing number of recent securities class actions.

“Securities class action frequency is at an all-time high for the past three years,” Riccio said. “In 2018, the total was up 200 percent from the 10-year annual average between 1997 and 2017, according to Cornerstone Research’s latest report on securities class action filings.”

That increase is being driven by these nine factors — some of which companies and their insurers have never had to contend with before:

1. Stock Market Volatility Drives Shareholder Litigation

Dramatic fluctuations in stock value tend to give rise to securities class actions by dissatisfied shareholders. In 2018, Wall Street experienced more highs and lows than in any prior year since the recession of 2008. Compounding the issue is that more law firms are capitalizing on the volatility by making securities litigation a core part of their business.

According to Cornerstone’s “Securities Class Action Filings, 2018 Year in Review,” a high number of IPOs in 2017 and 2018 have also contributed to more frequent securities filings. With 134 IPOs, 2018 was above the 2001-2011 average of 99 IPOs per year but remained well below the 1997-2000 average of 403 IPOs per year.

“Stocks offered in an initial public offering are more vulnerable to market volatility,” Riccio said. Going public during a downturn can immediately negatively affect stock value, disappoint investor expectations, and draw a lawsuit.

2. M&A Activity Means Merger-Related Lawsuits

Though the total number of mergers and acquisitions dropped slightly in 2018 over 2017, the trend of consolidation is still strong. Deal value also increased. Global M&A deals made through the first three quarters of 2018 were worth nearly $3.3 trillion, a 39 percent increase over 2017.

“Any time you have a merger or acquisition, there’s a chance you’ll see what’s called a ‘bump-up’ or merger-related lawsuit,” Riccio said. “That inflates the total class action number.”

According to Bloomberg Law, 204 new securities class actions were filed in first half of 2018, and more than 45 percent of them were merger-related.

3. Event-Driven Litigation Presents New Liability Exposure

Companies are increasingly facing liability action over catastrophic events. After the destructive wildfires that wrought havoc across California in 2017, for example, utility companies are facing allegations that their equipment played a role in sparking the flames.

“Energy companies have seen D&O claims arising out of their potential involvement in starting these fires,” Riccio said. “Events like this traditionally would not be perceived as a D&O exposure. It’s a new market dynamic leading to an increase in securities class actions, which is leading to increased losses in a market that hasn’t priced for it.”

4. Boards of Directors Face Accountability for Data Breaches

Securities class actions related to data breaches are growing more common and costly. “We’re starting to see D&O claims arise from data breaches and failure to disclose appropriately to the market information regarding any breach an organization suffered,” Riccio said.

Plaintiffs’ attorneys are quick to file suit on behalf of shareholders based on significant drops in stock value following the disclosure of a breach, and on allegations of misrepresentation in SEC filings regarding the strength of their cyber security prior to the breach.

In a recent high-profile case, Yahoo paid $80 million in September of 2018 to settle a securities class action alleging that the company repeatedly misled investors after four separate data breaches that affected as many as 5 billion accounts. Over the course of 2018, at least nine such actions have been filed against public companies related to a data breach.

5. Allegations of Sexual Harassment Imply Board-Level Mismanagement

Class actions may arise from allegations of sexual harassment against senior executives of a company but will target the entire board of directors over how they handle the situation. Lack of adequate disclosure about the incident or an insufficient response can hurt the company’s stock value and ultimately be fodder for a securities class action.

Plaintiffs can also allege that the company misled investors by not disclosing patterns of misconduct committed by senior executives and failed to acknowledge the negative impact of misconduct on the company’s reputation, legal liability exposure, and overall ability to operate. If company assets were used to make confidential settlements with accusers, then allegations can also include breach of fiduciary duty.

6. Social Media Amplifies Effects of Any Negative News

Social media adds fuel to the flame when it comes to many emerging sources of D&O exposure. The #MeToo movement, for example, has made accusations of sexual harassment front page news. Anger over incidents like data breaches or supposed liability for natural disasters can build and spread faster.

When negative news travels farther and lingers longer, it prolongs the impact of any negative event on a company’s stock price, sparks calls for further investigation, and may attract the attention of attorneys looking for a deep-pocketed target.

“Social media has played a role in giving rise to securities class actions that 10 years ago would not have been filed, simply because it creates an extended period of negative press that companies have a harder time coming out of unscathed,” Riccio said.

7. The Cyan Decision May Mean More Suits and More Defense Costs

In the case of Cyan Inc. v. Beaver County Employees Retirement Fund, the Supreme Court ruled early last year that securities plaintiffs could bring class actions against companies under the Securities Act of 1933 in in state courts.

“Prior to this decision if you had a securities claim in state court and federal court alleging breaches of the ’33 Act, they would be consolidated and move forward only in one jurisdiction. The Cyan decision says that the company cannot remove the state court lawsuit to federal court, even if there’s a parallel or identical federal court action. So that permits the lawsuits in state court and in federal court, with the same sets of allegations and facts, to go on side by side,” Riccio said.

“That’s causing more defense costs to be incurred on behalf of the company that’s being sued, and that’s causing more liability to the D&O marketplace because those defense costs may be picked up by a D&O insurance policy.”

8. Cryptocurrency Is Prone to Corruption, Volatility, and Litigation

Because it’s unregulated and its value swings so wildly, companies investing in cryptocurrencies are very vulnerable to securities litigation.

“The cryptocurrency marketplace has been extremely volatile, which has led to a lot of D&O litigation in that space,” Riccio said. “Any time you have a new unregulated investment vehicle, it’s just ripe for manipulation and corruption, and for people to get taken advantage of.”

Most cryptocurrency purveyors that go public with initial coin offerings — or ICOs — have been hit with a securities class action. Through the first half of 2018, at least 12 ICO-related actions were filed.

9. Mega Verdicts and Settlements Hit D&O Policies

Rising liability verdicts and settlements reaching into the multimillion- and even billion-dollar range also enhance D&O exposure.

“Any asset is fair game when you have a mega liability settlement, and that includes D&O insurance, whether the allegation is related to mismanagement or not. Plaintiffs’ attorneys will look for dollars wherever they can,” Ricco said.

The Right Partner Helps Withstand Volatility

During this time of historic volatility and rapidly emerging exposure, companies absolutely need stability in their D&O carrier.

“We’ve been in the D&O market for more than 10 years and are committed to the space; we’re A+ rated, and we’re stable,” Riccio said. “Even with rising securities class action frequency and increased loss costs, we strive for a price point that is fair to both sides.”

Companies can trust in that statement because, as a mutual company, Nationwide’s fiduciary duty is to its insured members, rather than shareholders. “Our obligation is to our members, so we work hard to truly partner with them,” Riccio said.

That mission includes providing a suite of both primary and excess products for companies of every size in any sector, so a solution exists for every member. A partnership philosophy also extends to the claims approach.

“We handle all claims in-house, and we have a tremendous expertise on that side of the house. Our claims professionals work closely with underwriters in order to adjudicate as quickly as possible. We’re always looking out for members’ best interests,” Riccio said.

As professional liability risk becomes more prominent and more unpredictable, carrier stability and commitment will be critical characteristics as the market adapts.

This article was produced by the R&I Brand Studio, a unit of the advertising department of Risk & Insurance, in collaboration with Nationwide. The editorial staff of Risk & Insurance had no role in its preparation.

Nationwide, a Fortune 100 company, is one of the largest and strongest diversified insurance and financial services organizations in the U.S. and is rated A+ by both A.M. Best and Standard & Poor’s.

Across the workers’ compensation industry, the concept of a worker advocacy model has been around for a while, but has only seen notable adoption in recent years.

Even among those not adopting a formal advocacy approach, mindsets are shifting. Formerly claims-centric programs are becoming worker-centric and it’s a win all around: better outcomes; greater productivity; safer, healthier employees and a stronger bottom line.

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That’s what you’ll see in this month’s issue of Risk & Insurance® when you read the profiles of the four recipients of the 2018 Theodore Roosevelt Workers’ Compensation and Disability Management Award, sponsored by PMA Companies. These four programs put workers front and center in everything they do.

“We were focused on building up a program with an eye on our partner experience. Cost was at the bottom of the list. Doing a better job by our partners was at the top,” said Steve Legg, director of risk management for Starbucks.

Starbucks put claims reporting in the hands of its partners, an exemplary act of trust. The coffee company also put itself in workers’ shoes to identify and remove points of friction.

That led to a call center run by Starbucks’ TPA and a dedicated telephonic case management team so that partners can speak to a live person without the frustration of ‘phone tag’ and unanswered questions.

“We were focused on building up a program with an eye on our partner experience. Cost was at the bottom of the list. Doing a better job by our partners was at the top.” — Steve Legg, director of risk management, Starbucks

Starbucks also implemented direct deposit for lost-time pay, eliminating stressful wait times for injured partners, and allowing them to focus on healing.

For Starbucks, as for all of the 2018 Teddy Award winners, the approach is netting measurable results. With higher partner satisfaction, it has seen a 50 percent decrease in litigation.

Teddy winner Main Line Health (MLH) adopted worker advocacy in a way that goes far beyond claims.

Employees who identify and report safety hazards can take credit for their actions by sending out a formal “Employee Safety Message” to nearly 11,000 mailboxes across the organization.

“The recognition is pretty cool,” said Steve Besack, system director, claims management and workers’ compensation for the health system.

MLH also takes a non-adversarial approach to workers with repeat injuries, seeing them as a resource for identifying areas of improvement.

“When you look at ‘repeat offenders’ in an unconventional way, they’re a great asset to the program, not a liability,” said Mike Miller, manager, workers’ compensation and employee safety for MLH.

Teddy winner Monmouth County, N.J. utilizes high-tech motion capture technology to reduce the chance of placing new hires in jobs that are likely to hurt them.

Monmouth County also adopted numerous wellness initiatives that help workers manage their weight and improve their wellbeing overall.

“You should see the looks on their faces when their cholesterol is down, they’ve lost weight and their blood sugar is better. We’ve had people lose 30 and 40 pounds,” said William McGuane, the county’s manager of benefits and workers’ compensation.

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Do these sound like minor program elements? The math says otherwise: Claims severity has plunged from $5.5 million in 2009 to $1.3 million in 2017.

At the University of Pennsylvania, putting workers first means getting out from behind the desk and finding out what each one of them is tasked with, day in, day out — and looking for ways to make each of those tasks safer.

Regular observations across the sprawling campus have resulted in a phenomenal number of process and equipment changes that seem simple on their own, but in combination have created a substantially safer, healthier campus and improved employee morale.

UPenn’s workers’ comp costs, in the seven-digit figures in 2009, have been virtually cut in half.

Risk & Insurance® is proud to honor the work of these four organizations. We hope their stories inspire other organizations to be true partners with the employees they depend on. &

Michelle Kerr is associate editor of Risk & Insurance. She can be reached at [email protected]

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